Royal Bank of Scotland Group (LON:RBS) has expectedly been one of today’s UK share prices to watch, falling sharply with investors digesting its interim results. The shares are underperforming the broader market selloff prompted by US President Donald Trump’s move to impose extra tariffs on China.
RBS tumbles, IAG flies higher on Friday
RBS is drifting lower even as it reported a rise in interim profit and announced a special dividend. The market, however, is instead digesting the bailed-out lender’s warning that “given current market conditions, continued economic and political uncertainty and the contraction of the yield curve, it is very unlikely that we will achieve our target return on tangible equity of more than 12 percent and cost:income ratio of less than 50 percent in 2020”. RBS’ shares are trading about 6.7 percent in the red in early afternoon trade, as compared with about a 1.8-percent slump in the benchmark FTSE 100 index.
BT Group (LON:BT.A) is another blue-chip to underperform the market selloff as it posted a drop in revenue and profits for the first quarter of its financial year. The company, however, reiterated its outlook for the year. In May, the group had forecast a two-percent drop in revenue and adjusted EBITDA of between £7.2 billion and £7.3 billion.
The Financial Times quoted Robert Grindle, an analyst with Deutsche Bank, as saying that while the former telecom monopoly had beaten expectations, it had masked a weaker performance in its consumer business. BT’s stock is down by more than four percent this Friday.
British Airways parent International Consolidated Airlines (LON:IAG) has also been among today’s UK share prices to watch, being a bright spot in a sea of red as it posted a rise in quarterly profit despite higher fuel costs.
The Financial Times quoted Gerald Khoo, analyst at Liberum, as adding that the encouraging performance for the second quarter with modest profit growth was “a rare occurrence in the European airline industry at present”. IAG’s shares are up by about 4.7 percent so far today.
Broader market sentiment meanwhile has taken a hit as the US signalled extra tariffs on Chinese imports.
“Talks between the US and China will continue in September, but there is no apparent willpower to resolve the yearlong trade dispute. Trump threatens to ‘tax the hell out of China’ and to raise the tariffs to 25% if there is no progress in talks,” Ipek Ozkardeskaya at LCG commented, as quoted by Proactive Investors. “The truth is, these attacks could make it gradually harder to find a common ground between the two counties. China’s Wang Yi said that this is not a way to resolve frictions. The risk is that the US’s rising pressure on China could backlash and compromise the future of negotiations.”
Next week’s UK share prices to watch
HSBC Holdings (LON:HSBA) is due to end the FTSE 100 banking reporting season on Monday and Proactive Investors reports that analysts at Jefferies see a 50/50 chance that the lender will announce a share buyback with its interims.
“Whilst any share buy back would be small relative to market cap, a retrenchment would be a bearish signal,” the broker pointed out.
InterContinental Hotels Group (LON:IHG) and Rolls-Royce (LON:RR) will provide some excitement on Tuesday. The engine maker’s results will follow its annual general meeting statement in May when the company said that it remained confident in its underlying operating profit and free cash flow guidance of £700 million +/- £100 million.
Standard Life Aberdeen (LON:SLA) will be among Wednesday’s UK share prices to watch, with the update to come after the company agreed to settle its dispute with Lloyds Banking Group (LON:LLOY). The settlement will see the FTSE 100 lender pay £140 million to the asset manager over its move to terminate a £100-billion contract early.
“The settlement and allocation of funds in favour of SLA is welcome news and will help reduce investors fears about capital outflows from the asset manager,” Aaran Fronda at IG commented in a note this week, adding that two years following the merger between Standard Life and Aberdeen Asset Management, investors were still waiting to see the deal bear fruit, with the asset manager’s share price having tumbled more than 30 percent since being formed.
Glencore (LON:GLEN) and Legal & General (LON:LGEN) will also follow with their respective results on Wednesday, while Hargreaves Lansdown (LON:HL) and Aviva (LON:AV) report on Thursday.
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